Competition in business is usually a good thing. Sure, we’d all like to have the market cornered, but without a little competition we would perhaps never figure out ways to improve our products or services and keep our customers coming back.
In an interesting article on Infusionsoft’s “Big Ideas Blog,” a few examples of businesses thinking outside the box were shared. 3Tees is a Singapore based company that prints T-shirts for companies “promoting events with a social cause.” It has a slogan of “You price it. We print it.” The company allows customers to determine the price of the shirts and their pricing strategy has proven successful. According to the article, the vast majority of customers make genuine offers that both fit within budget and provide an acceptable profit margin. In fact, while the company is willing to reject extreme low-ball offers, they have discovered that only 5% of total bids fit within this category.
One of the biggest reasons 3Tees is successful in their pricing strategy is their belief that, “given enough information and trust,” customers will make fair offers. Allowing customers to make offers for a vehicle purchase is a common practice in sales departments for dealerships. However, the challenges of educating customers on the technical aspects of a given service repair might prove a bit more challenging. In the automobile industry a “You price it. We repair it” pricing model probably wouldn’t go over well, and far be it that anyone would suggest such a thing!
My point here is that, if the name of the game is customer loyalty, then ultimately, every dealership will have to do something different than what has been done before. Everything changes, especially in our fast-paced world: from implementing new marketing strategies, to offering superior products, or an evolving customer experience. Finding new and creative ways to retain your customers, while still building new business, is an ongoing project, not a one-day or static invention. Dealerships have a mindset of being notoriously complacent and are often discouraged by management from trying anything that is outside the norm. How many times do you still see inflated gorillas hawking a weekend sale on the roof of a dealership? Taking a “safe” approach is generally expected and often encouraged in dealerships today. But with overuse of the safe approach, eventually will come diminished results. You should be thinking about how you can market differently than your competitor down the street. Ask yourself how you can set yourself apart as Cal Worthington did with his stores years ago. While Cal’s approach may have been a bit gimmicky, it worked at the time, and is actually documented in many marketing text books.
So just think about it. Every so often, it’s perhaps time take a trip up to 10,000 feet, open the doors and look at the landscape of your competition. Try and encourage creative thinking from both your staff and vendors. Unless you are the already the king of the hill when it comes to retaining and acquiring customers, there will come a day when you have to do something just a little different to keep your customers, or lure new ones into your dealership. As a dealer principal or manager, are you willing to take a chance and try a few out of the ordinary ideas to expand your business?
When consumers think of loyalty programs, they typically think of racking up miles, or frequenting a business in exchange for rewards, perks or freebies. No matter what business you patronize, there is a good chance that it is offering some sort of loyalty incentive. In fact, many argue that loyalty programs are so prevalent nowadays that they are losing some of the initial qualities that attracted consumers to them back some 45 years ago. Namely, that feeling of being treated special in exchange for the customer’s ongoing business and continued loyalty. Today, some loyalty programs choose not to even offer rewards. Instead they just provide the concept of receiving lower prices. Many grocery store chains have the regular price and then a loyalty member price. Sale prices are reserved just for members of their loyalty program. Your information and transaction histories are exchanged with the grocery store for a slightly lower total at the checkout counter.
Loyalty programs have certainly evolved. Many companies are shifting away from traditional rewards and offering experiences and other perks instead. The restaurant chain, Olive Garden, found that it’s “Never Ending Pasta Bowl” promotion was by far the most popular. So it decided to take it a step further and last month introduced the “Never Ending Pasta Pass.” The pass allow customers to enjoy all-you-can-eat pasta as many times as the customer wishes for a period of up to 7 weeks. The offer also allows the customer to extend some of the pass’s perks to as many as 7 guests dining with them. Olive Garden made the offer exclusive by offering just 1,000 passes through their website, at a cost of $100 each.
They sold out completely in just 45 minutes. Some may view this as a loss leader promotion. However, according to an article in USA Today, the restaurant chain came up with this promotion as it wished to provide a VIP experience for some of its most loyal and profitable customers.
Similar to the Starbucks metal gift cards that sell out annually, the Never Ending Pasta Pass offers Olive Garden’s most enthusiastic customers the opportunity to enjoy a VIP experience as many times as they like. It also generates instant (and quantifiable) revenue, while encouraging the pass holder to bring guests. This clever addition helps generate more revenue with each additional dining partner. In addition, a promotion like this (obviously) can generate press, blog articles and social media buzz. Olive Garden even teased consumers who were not able to purchase one by dangling carrots of extra passes that will be handed out through social media properties.
What do you think about adopting such a program as a car dealership? Imagine offering a limited quantity season long car wash pass that includes some service perks over and above what you would normally do for a customer. Or some other privileges, while also extending discounts to the customer’s friends and family members that bring their vehicles in with them.
In general, people like to feel special. Whether it’s showing off a metal gift card at Starbucks, laying down the Never Ending Pasta Pass at Olive Garden, or getting an on-demand car wash without waiting. When creating incentives for your loyal customers, thinking outside the box can make them feel very special while providing a reason for them to bring new customers to your store. And that’s one of the most important attributes that any loyal customer brings to any business – more customers.
I had just finished reading this article on marketsoft.com about customer loyalty, when a business associate told me about a similar situation that happened to him. In his mailbox was a glossy, oversized postcard offering a discounted oil change for his vehicle from the dealership from which he purchased it. In an attempt to cater to new customers, the dealership was offering a $16.95 oil change, which it claimed, was a savings of over 50 percent off of the regular price of $34.95. The next day, my associate received an email from the service department at the same dealership. It was reminding him that his oil change was due and that he could schedule an appointment on the dealership’s website and lock in the VIP customer rate of $34.95 for the oil change.
Wait, what? The VIP customer price is actually the regular price. Where is the VIP rate? As a current customer, it surely appears that he needs to pay double? It may not seem to be a costly mistake on the surface. But stop for a moment and view it as the customer would. Suddenly both of the communication pieces become worthless as the customer level of trust is now fractured.
This happens all too often in the auto industry. For marketing purposes, customer information and vehicle data is imported into a CRM from a DMS, or many times obtained from outside third party resources. Sometimes the information is duplicated, errors occur between software platforms due to different data structures, multiple entries are created, and of course, sometimes, humans make mistakes with their data entry. You can probably count dozens of ways that you’ve gathered customer information: in person; from the OEM; purchased marketing lists; and Internet leads are just some that come easily to mind. Data isn’t routinely scrubbed for duplication or errors. With the numerous software applications being used, it isn’t hard to see how in one instance, one person may be viewed as a valuable prospective new customer, and then in an instant becomes a long-time “VIP” customer
A customer database is a gold mine and should be treated as such. Have you ever taken the time to evaluate how you assign customer ID numbers to your service files? Duplications and old outdated information is the norm, not the exception in most dealerships today. Every dealership would be wise to make a concerted effort to go through their customer database, update phone numbers, emails, remove duplicate entries, and ensure that the data is correct. How many times has your store sent out a service reminder to an individual that no longer has the vehicle? Without accurate data, how can you correctly target your customers and prospects? Customer attrition will surely accelerate if you make the mistake my associate’s dealership did of targeting the same customer with different messages, offering a higher price for a “VIP” customer than a new customer: that’s a great way to drive away loyal customers.
It is common knowledge that it costs significantly more to attract and obtain new customers than it does to retain current ones. With little or no profit in the discounted oil change, it is fair to assume the dealership hopes to sell additional services to the customer when they first visit, as well as capture their future business. However, what is surprising is that, like many other companies, this dealership appears to be focusing the majority of their efforts on customer acquisition, instead of customer retention.
Looking at the volume of car dealers that use newspaper ads and television commercials to deliver sales offers, the audience is clearly directed to acquiring new customers instead of delivering messages to their existing customer base. While acquisition is always a necessity in order for businesses to grow, the marketing efforts used are often out of proportion to the energies, resources and potential returns on maintaining existing customers.
The marketsoft.com article shared a research study by Harris Interactive, which found that “only 38% of businesses are primarily focused on repeat customers for revenue growth, while nearly half (49%) are still focused on new customers.” Assuming these numbers hold true with car dealerships, as they do with other businesses, it comes as no surprise that the dealership my associate has used for years is trying to capture new business by luring him in with a service special. However, the dealership is actually shooting itself in the foot by sending him both offers so he can see how little value he has as a regular, loyal customer.
It’s important to have an ongoing effort of eliminating multiple customer files and ensuring that the data you have is accurate. Investing in the resources to review and clean your data can pay off immediately. It enables your dealership to generate the correct marketing pieces to each precisely targeted segment of prospective customers. It can also save you from the embarrassment of sending lowball customer acquisition offers to customers who don’t qualify for the offer. This then leads to better customer loyalty, a rise in customer retention and a lessening of customer attrition.
It sounds backwards, at first, but when was the last time you asked your customers for a complaint or some constructive criticism? If you’re like most dealerships, you’re doing everything you can to avoid complaints and negative reviews. In the past, you may have even ignored customers that voiced a complaint. However, in today’s world of instant feedback and review sites, it’s key to understand the importance of taking care of your customers. Failing to listen to them could damage your reputation. This is why many dealerships survey their customer via e-mail within 24-48 hours of purchase or vehicle service.
Why would you want to purposely bring attention to the shortcomings of your dealership or your staff? The answer: It’s a great way to improve customer service in the future.
Imagine your service writer or cashier handing a comment card to the customer when the work has been performed. Are you likely to get the card completed on the spot? Statistically the odds are small. Your team’s follow up call a couple of days later may not yield a truthful answer either – unless the proper question is being asked.
According to a recent blog on Forbes.com, by Salesforce.com Vice President & Chairman of Customer Care Management & Consulting, John Goodman, many companies believe that when complaints decline satisfaction levels increase when, in fact, that’s typically not the case. The blog goes on to state: “…not even 25% of customers bring their service issues forward because it’s often just too much hassle. Many of them still believe companies won’t care and/or won’t fix the problem to their satisfaction, even if they did receive their complaint.”
Genuine complaints can be valuable – you can’t fix things that you don’t know need correcting. Consider a service advisor that over-promises the timeliness or cost of a repair. The work takes longer than expected and costs more than estimated. And the customer doesn’t voice the complaint. There clearly was a problem (at least from the customer’s perception) and management should know so the advisor can be trained properly so as to provide more accurate information in the future.
Goodman advises that you use the verbiage, “We can only resolve problems we know about” when soliciting feedback from customers. Using a message like this will invite the customer to open up and bring to the forefront any complaints. In this way the problem can be handled and the customer does not feel the need to defect to another dealership, give low marks on an OEM survey, or post negative comments on social media. It’s far better to hear the bad before they go home and take their unresolved issues to Facebook or Yelp! Inviting their feedback immediately can help solve problems faster and help the dealership improve through a more accurate awareness of customer experiences.
If your dealership can capture honest and immediate feedback from the majority of its customers, your success rate to resolve the issues can skyrocket. Along the way, asking for complaints may yield some great positive reviews or feedback as well.
At your service desks, a sign that reads: How did we do today? Tell us, we really want to know. Or you something along the lines of, “Now accepting complaints” or “Wanted: Your Complaints. We want to be perfect.”
If you request legitimate complaints or ask your customers for ways that you can improve your levels of service – you’re bound to get some. This proactive solicitation of complaints will impress your customers. If you then actually take steps to change your processes to avoid the same problem in the future, customers will see that you really care (or at least the original complainer will). And that’s how customer loyalty is built… one customer at a time.
If you implement a process like this, you may find that more complaints can actually lead to increased customer satisfaction levels.